TITLE VIII--ANTITRUST

TITLE IX--FINANCING

SEC. 3. SENSE OF CONGRESS ON WORK OF BILL EMERSON.

It is the sense of the Congress that this Act reflects the dedication of the late Representative Bill Emerson, who served on the Steering Committee of the Rural Health Care Coalition of the House of Representatives, to ensuring health care access for all rural Americans.

(a) IN GENERAL- Section 1876(a) of the Social Security Act (42 U.S.C. 1395mm(a)) is amended to read as follows:

‘(a)(1)(A) The Secretary shall annually determine, and shall announce (in a manner intended to provide notice to interested parties) not later than August 1 before the calendar year concerned--

‘(i) a per capita rate of payment for individuals who are enrolled under this section with an eligible organization which has entered into a risk-sharing contract and who are entitled to benefits under part A and enrolled under part B, and

‘(ii) a per capita rate of payment for individuals who are so enrolled with such an organization and who are enrolled under part B only.

For purposes of this section, the term ‘risk-sharing contract’ means a contract entered into under subsection (g) and the term ‘reasonable cost reimbursement contract’ means a contract entered into under subsection (h).

‘(B) The annual per capita rate of payment for each medicare payment area (as defined in paragraph (5)) shall be equal to the adjusted capitation rate (as defined in paragraph (4)), adjusted by the Secretary for--

‘(i) individuals who are enrolled under this section with an eligible organization which has entered into a risk-sharing contract and who are enrolled under part B only; and

‘(ii) such risk factors as age, disability status, gender, institutional status, and such other factors as the Secretary determines to be appropriate so as to ensure actuarial equivalence. The Secretary may add to, modify, or substitute for such factors, if such changes will improve the determination of actuarial equivalence.

‘(C) In the case of an eligible organization with a risk-sharing contract, the Secretary shall make monthly payments in advance and in accordance with the rate determined under subparagraph (B) and except as provided in subsection (g)(2), to the organization for each individual enrolled with the organization under this section.

‘(D) The Secretary shall establish a separate rate of payment to a eligible organization with respect to any individual determined to have end-stage renal disease and enrolled with the organization. Such rate of payment shall be actuarially equivalent to rates paid to other enrollees in the payment area (or such other area as specified by the Secretary).

‘(E)(i) The amount of payment under this paragraph may be retroactively adjusted to take into account any difference between the actual number of individuals enrolled in the plan under this section and the number of such individuals estimated to be so enrolled in determining the amount of the advance payment.

‘(ii)(I) Subject to subclause (II), the Secretary may make retroactive adjustments under clause (i) to take into account individuals enrolled during the period beginning on the date on which the individual enrolls with an eligible organization (which has a risk-sharing contract under this section) under a health benefit plan operated, sponsored, or contributed to by the individual’s employer or former employer (or the employer or former employer of the individual’s spouse) and ending on the date on which the individual is enrolled in the plan under this section, except that for purposes of making such retroactive adjustments under this clause, such period may not exceed 90 days.

‘(II) No adjustment may be made under subclause (I) with respect to any individual who does not certify that the organization provided the individual with the explanation described in subsection (c)(3)(E) at the time the individual enrolled with the organization.

‘(F)(i) At least 45 days before making the announcement under subparagraph (A) for a year, the Secretary shall provide for notice to eligible organizations of proposed changes to be made in the methodology or benefit coverage assumptions from the methodology and assumptions used in the previous announcement and shall provide such organizations an opportunity to comment on such proposed changes.

‘(ii) In each announcement made under subparagraph (A) for a year, the Secretary shall include an explanation of the assumptions (including any benefit coverage assumptions) and changes in methodology used in the announcement in sufficient detail so that eligible organizations can compute per capita rates of payment for individuals located in each county (or equivalent medicare payment area) which is in whole or in part within the service area of such an organization.

‘(2) With respect to any eligible organization which has entered into a reasonable cost reimbursement contract, payments shall be made to such plan in accordance with subsection (h)(2) rather than paragraph (1).

‘(3) Subject to subsections (c)(2)(B)(ii) and (c)(7), payments under a contract to an eligible organization under paragraph (1) or (2) shall be instead of the amounts which (in the absence of the contract) would be otherwise payable, pursuant to sections 1814(b) and 1833(a), for services furnished by or through the organization to individuals enrolled with the organization under this section.

‘(4)(A) For purposes of this section, the ‘adjusted capitation rate’ for a medicare payment area (as defined in paragraph (5)) is equal to the greatest of the following:

‘(i) The sum of--

‘(I) the area-specific percentage for the year (as specified under subparagraph (B) for the year) of the area-specific adjusted capitation rate for the year for the medicare payment area, as determined under subparagraph (C), and

‘(II) the national percentage (as specified under subparagraph (B) for the year) of the input-price-adjusted national adjusted capitation rate for the year, as determined under subparagraph (D),

‘(I) in the case of 1997, 80 percent of the input-price-adjusted national adjusted capitation rate for the year, as determined under subparagraph (D); and

‘(II) in the case of a succeeding year, the amount specified in this clause for the preceding year increased by the national average per capita growth percentage specified under subparagraph (F) for that succeeding year.

‘(iii) An amount equal to--

‘(I) in the case of 1997, 102 percent of the annual per capita rate of payment for 1996 for the medicare payment area (determined under this subsection, as in effect on the day before the date of enactment of the Rural Health Improvement Act of 1996; and

‘(II) in the case of a subsequent year, 102 percent of the adjusted capitation rate under this subsection for the area for the previous year.

‘(B) For purposes of subparagraph (A)(i)--

‘(i) for 1997, the ‘area-specific percentage’ is 90 percent and the ‘national percentage’ is 10 percent,

‘(ii) for 1998, the ‘area-specific percentage’ is 85 percent and the ‘national percentage’ is 15 percent,

‘(iii) for 1999, the ‘area-specific percentage’ is 80 percent and the ‘national percentage’ is 20 percent,

‘(iv) for 2000, the ‘area-specific percentage’ is 75 percent and the ‘national percentage’ is 25 percent, and

‘(v) for a year after 2000, the ‘area-specific percentage’ is 70 percent and the ‘national percentage’ is 30 percent.

‘(C) For purposes of subparagraph (A)(i), the area-specific adjusted capitation rate for a medicare payment area--

‘(i) for 1997, is the average of the annual per capita rates of payment for the area for 1994 through 1996, after adjusting the 1994 and 1995 rates of payment to 1996 dollars, increased by the national average per capita growth percentage for 1997 (as defined in subparagraph (F)); or

‘(ii) for a subsequent year, is the area-specific adjusted capitation rate for the previous year determined under this subparagraph for the area, increased by the national average per capita growth percentage for such subsequent year.

‘(D)(i) For purposes of subparagraph (A)(i) and subparagraph (A)(ii), the input-price-adjusted national adjusted capitation rate for a medicare payment area for a year is equal to the sum, for all the types of medicare services (as classified by the Secretary), of the product (for each such type of service) of--

‘(I) the national standardized adjusted capitation rate (determined under clause (ii)) for the year,

‘(II) the proportion of such rate for the year which is attributable to such type of services, and

‘(III) an index that reflects (for that year and that type of services) the relative input price of such services in the area compared to the national average input price of such services.

In applying subclause (III), the Secretary shall, subject to clause (iii), apply those indices under this title that are used in applying (or updating) national payment rates for specific areas and localities.

‘(ii) In clause (i)(I), the ‘national standardized adjusted capitation rate’ for a year is equal to--

‘(I) the sum (for all medicare payment areas) of the product of (aa) the area-specific adjusted capitation rate for that year for the area under subparagraph (C), and (bb) the average number of standardized medicare beneficiaries residing in that area in the year; divided by

‘(II) the total average number of standardized medicare beneficiaries residing in all the medicare payment areas for that year.

‘(iii) In applying this subparagraph for 1997--

‘(I) medicare services shall be divided into 2 types of services: part A services and part B services;

‘(II) the proportions described in clause (i)(II) for such types of services shall be--

‘(aa) for part A services, the ratio (expressed as a percentage) of the national average annual per capita rate of payment for part A for 1996 to the total average annual per capita rate of payment for parts A and B for 1996, and

‘(bb) for part B services, 100 percent minus the ratio described in item (aa);

‘(III) for part A services, 70 percent of payments attributable to such services shall be adjusted by the index used under section 1886(d)(3)(E) to adjust payment rates for relative hospital wage levels

for hospitals located in the payment area involved; and

‘(IV) for part B services--

‘(aa) 66 percent of payments attributable to such services shall be adjusted by the index of the geographic area factors under section 1848(e) used to adjust payment rates for physicians’ services furnished in the payment area, and

‘(bb) of the remaining 34 percent of the amount of such payments, 70 percent shall be adjusted by the index described in subclause (III).

The Secretary may continue to apply the rules described in this clause (or similar rules) for 1998.

‘(E) For each year, the Secretary shall compute a budget neutrality adjustment factor so that the aggregate of the payments under this section shall be equal to the aggregate payments that would have been made under this section if the area-specific percentage for the year had been 100 percent and the national percentage had been 0 percent.

‘(F) In this section, the ‘national average per capita growth percentage’ is equal to the percentage growth in medicare fee-for-service per capita expenditures, which the Secretary shall project for each year.

‘(5)(A) In this section, except as provided in subparagraph (C), the term ‘medicare payment area’ means a county, or equivalent area specified by the Secretary.

‘(B) In the case of individuals who are determined to have end stage renal disease, the medicare payment area shall be specified by the Secretary.

‘(C)(i) Upon written request of the Chief Executive Officer of a State for a contract year (beginning after 1997) made at least 7 months before the beginning of the year, the Secretary shall adjust the system under which medicare payment areas in the State are otherwise determined under subparagraph (A) to a system which--

‘(I) has a single statewide medicare payment area,

‘(II) is a metropolitan based system described in clause (iii), or

‘(III) which consolidates into a single medicare payment area noncontiguous counties (or equivalent areas described in subparagraph (A)) within a State.

Such adjustment shall be effective for payments for months beginning with January of the year following the year in which the request is received.

‘(ii) In the case of a State requesting an adjustment under this subparagraph, the Secretary shall adjust the payment rates otherwise established under this section for medicare payment areas in the State in a manner so that the aggregate of the payments under this section in the State shall be equal to the aggregate payments that would have been made under this section for medicare payment areas in the State in the absence of the adjustment under this subparagraph.

‘(iii) The metropolitan based system described in this clause is one in which--

‘(I) all the portions of each metropolitan statistical area in the State or in the case of a consolidated metropolitan statistical area, all of the portions of each primary metropolitan statistical area within the consolidated area within the State, are treated as a single medicare payment area, and

‘(II) all areas in the State that do not fall within a metropolitan statistical area are treated as a single medicare payment area.

‘(iv) In clause (iii), the terms ‘metropolitan statistical area’, ‘consolidated metropolitan statistical area’, and ‘primary metropolitan statistical area’ mean any area designated as such by the Secretary of Commerce.

‘(6) Subject to subsections (c)(2)(B)(ii) and (c)(7), if an individual is enrolled under this section with an eligible organization having a risk-sharing contract, only the eligible organization shall be entitled to receive payments from the Secretary under this title for services furnished to the individual.’.

(b) EFFECTIVE DATE- The amendment made by this section shall take effect on October 1, 1996.

TITLE II--GRANTS TO ENCOURAGE ESTABLISHMENT OF COMMUNITY RURAL HEALTH NETWORKS

SEC. 201. ASSISTANCE FOR DEVELOPMENT OF ACCESS PLANS FOR CHRONICALLY UNDERSERVED AREAS.

(1) IN GENERAL- The Secretary shall provide grants (in amounts determined in accordance with paragraph (3)) over a 3-year period to an eligible State for the development of plans to increase access to health care services during such period for residents of areas in the State that are designated as chronically underserved areas in accordance with subsection (b).

(2) ELIGIBILITY REQUIREMENTS- A State is eligible to receive grants under this section if the State submits to the Secretary (at such time and in such form as the Secretary may require) assurances that the State has developed (or is in the process of developing) a plan to increase the access of residents of a chronically underserved area to health care services that meets the requirements of subsection (c), together with such other information and assurances as the Secretary may require.

(3) AMOUNT OF ASSISTANCE-

(A) IN GENERAL- Subject to subparagraph (B), the amount of assistance provided to a State under this subsection with respect to any plan during a 3-year period shall be equal to--

(i) for the first year of the period, an amount equal to 100 percent of the amounts expended by the State during the year to develop the plan described in paragraph (1) (as reported to the Secretary in accordance with such requirements as the Secretary may impose);

(ii) for the second year of the period, an amount equal to 50 percent of the amounts expended by the State during the year to develop the plan; and

(iii) for the third year of the period, an amount equal to 33 percent of the amounts expended by the State during the year to develop the plan.

(B) AGGREGATE PER PLAN LIMIT- The amount of assistance provided to a State under this subsection with respect to any plan may not exceed $100,000 during any year of the 3-year period for which the State receives assistance.

(b) DESIGNATION OF AREAS-

(1) DESIGNATION BY GOVERNOR- In accordance with the guidelines developed under paragraph (2), the Governor of a State may designate an area in the State as a chronically underserved area for purposes of this section upon the request of a local official of the area or upon the Governor’s initiative.

(2) GUIDELINES FOR DESIGNATION-

(A) DEVELOPMENT BY SECRETARY- Not later than 1 year after the date of the enactment of this Act, the Secretary shall develop guidelines for the designation of areas as chronically underserved areas under this section.

(B) FACTORS CONSIDERED IN DEVELOPMENT OF GUIDELINES- In developing guidelines under paragraph (1), the Secretary shall consider the following factors:

(i) Whether the area (or a significant portion of the area) is a rural area (under section 1886(d)(2)(D) of the Social Security Act) and--

(I) is designated as a health professional shortage area (under section 332(a) of the Public Health Service Act), or meets the criteria for designation as such an area; or

(II) was previously designated as such an area or previously met such criteria for an extended period prior to the designation of the area under this section (in accordance with criteria established by the Secretary).

(ii) The availability and adequacy of health care providers and facilities for residents of the area.

(iii) The extent to which the availability of assistance under other Federal and State programs has failed to alleviate the lack of access to health care services for residents of the area.

(iv) The percentage of residents of the area whose income is at or below the poverty level.

(v) The percentage of residents of the area who are age 65 or older.

(vi) The existence of cultural or geographic barriers to access to health care services in the area, including weather conditions.

(3) REVIEW BY SECRETARY- No designation under paragraph (1) shall take effect under this section unless the Secretary--

(A) has been notified of the proposed designation; and

(B) has not, within 60 days after the date of receipt of the notice, disapproved the designation.

(4) PERIOD OF DESIGNATION- A designation under this section shall be effective during a period specified by the Governor of not longer than 3 years. The Governor may extend the designation for additional 3-year periods, except that a State may not receive assistance under subsection (a)(3) for

amounts expended during any such additional periods.

(c) REQUIREMENTS FOR STATE ACCESS PLANS- A State plan to increase the access of residents of chronically underserved areas to health care services meets the requirements of this section if the Secretary finds that the plan was developed with the participation of health care providers and facilities and residents of the area that is the subject of the plan, together with such other requirements as the Secretary may impose.

(d) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated for assistance under this section $10,000,000 for each of the first 3 fiscal years beginning after the date on which the Secretary develops guidelines for the designation of areas as chronically underserved areas under subsection (b)(2).

SEC. 202. TECHNICAL ASSISTANCE GRANTS FOR NETWORKS.

(a) IN GENERAL- The Secretary shall make funds available under this section to provide technical assistance (including information regarding eligibility for other Federal programs) and advice for entities described in subsection (b) seeking to establish or enhance a community rural health network (as defined in section 204) in an underserved rural area.

(b) ENTITIES ELIGIBLE TO RECEIVE FUNDS- The following entities are eligible to receive funds for technical assistance under this section:

(1) An entity receiving a grant under section 203.

(2) A State or unit of local government.

(3) An entity providing health care services (including health professional education services) in the area involved.

(c) USE OF FUNDS-

(1) IN GENERAL- Funds made available under this section may be used--

(A) for planning a community rural health network and the submission of the plan for the network to the Secretary under section 203(c) (subject to the limitation described in paragraph (2));

(C) to provide advice on obtaining the proper balance of primary and secondary facilities for the population served by the network;

(D) to provide assistance in coordinating arrangements for tertiary care;

(E) to provide assistance in recruitment and retention of health care professionals;

(F) to provide assistance in coordinating the delivery of emergency services with the provision of other health care services in the area served by the network;

(G) to provide assistance in coordinating arrangements for mental health and substance abuse treatment services; and

(H) to provide information regarding the area or proposed network’s eligibility for Federal and State assistance for health care-related activities, together with information on funds available through private sources.

(2) LIMITATION ON AMOUNT AVAILABLE FOR DEVELOPMENT OF NETWORK- The amount of financial assistance available to an entity for activities described in paragraph (1) may not exceed $50,000 and may not be available for a period of time exceeding 1 year.

(d) USE OF RURAL HEALTH OFFICES- In carrying out this section with respect to entities in rural areas, the Secretary shall make funds available to the entities through the State offices of rural health or through appropriate entities designated by such offices.

(e) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated $10,000,000 for each of fiscal years 1997 through 2001 to carry out this section. Amounts appropriated under this section shall be available until expended.

SEC. 203. DEVELOPMENT GRANTS FOR NETWORKS.

(a) IN GENERAL- The Secretary shall provide financial assistance to eligible entities for the purpose of providing for the development and implementation of community rural health networks (as defined in section 204). In providing such assistance, the Secretary shall give priority to eligible entities that will carry out such purpose in States that have developed a plan under section 201.

(b) ELIGIBLE ENTITIES-

(1) IN GENERAL- An entity is eligible to receive financial assistance under this section only if the entity meets the requirements of subparagraphs (A) through (C) as follows:

(A) The entity--

(i) is based in a rural area; OR

(ii) is described in paragraph (2) or (3) of section 202(b).

(B) The entity is undertaking to develop and implement a community rural health network in one or more underserved rural areas (as defined in section 204) with the active participation of at least 3 health care providers or facilities in the area.

(C) The entity has consulted with the local governments of the area to be served by the network and with individuals who reside in the area.

(2) COORDINATION WITH PROVIDERS OUTSIDE OF AREA PERMITTED- Nothing in this section shall be construed as preventing an entity that coordinates the delivery of services in an underserved rural area with an entity outside the area from qualifying for financial assistance under this section, or as preventing an entity consisting of a consortia of members located in adjoining States from qualifying for such assistance.

(3) PERMITTING ENTITIES NOT RECEIVING FUNDING FOR DEVELOPMENT OF PLAN TO RECEIVE FUNDING FOR IMPLEMENTATION- An entity that is eligible to receive financial assistance under this section may receive assistance to carry out activities described in subsection (c)(1)(B) notwithstanding that the entity does not receive assistance to carry out activities described in subsection (c)(1)(A).

(c) USE OF FUNDS-

(1) IN GENERAL- Financial assistance made available to eligible entities under this section may be used only--

(A) for the development of a community health network and the submission of the plan for the network to the Secretary; and

(B) after the Secretary approves the plan for the network, for activities to implement the network, including (but not limited to)--

(i) establishing information systems, including telecommunications,

(ii) recruiting health care providers,

(iii) providing services to enable individuals to have access to health care services, including transportation and language interpretation services (including interpretation services for the hearing-impaired), and

(iv) establishing and operating a community health advisor program described in paragraph (2).

(2) COMMUNITY HEALTH ADVISOR PROGRAM-

(A) PROGRAM DESCRIBED- In paragraph (1), a ‘community health advisor program’ is a program under which community health advisors carry out the following activities:

(i) Collaborating efforts with health care providers and related entities to facilitate the provision of health services and health-related social services.

(ii) Providing public education on health promotion and disease prevention and efforts to facilitate the use of available health services and health-related social services.

(iii) Providing health-related counseling.

(iv) Making referrals for available health services and health-related social services.

(v) Improving the ability of individuals to use health services and health-related social services under Federal, State, and local programs through assisting individuals in establishing eligibility under the programs.

(vi) Providing outreach services to inform the community of the availability of the services provided under the program.

(B) COMMUNITY HEALTH ADVISOR DEFINED- In subparagraph (A), the term ‘community health advisor’ means, with respect to a community health advisor program, an individual--

(i) who has demonstrated the capacity to carry out one or more of the activities carried out under the program; and

(ii) who, for not less than one year, has been a resident of the community in which the program is to be operated.

(3) LIMITATIONS ON ACTIVITIES FUNDED- Financial assistance made available under this section may not be used for any of the following:

(A) For construction or renovation of a telecommunications system.

(B) For construction or remodeling of health care facilities.

(4) LIMITATION ON AMOUNT AVAILABLE FOR DEVELOPMENT OF NETWORK- The amount of financial assistance available to an entity for activities described in paragraph (1)(A) may not exceed $50,000 and may not be made available for a period of time exceeding 1 year.

(d) APPLICATION-

(1) IN GENERAL- No financial assistance shall be provided under this section to an entity unless the entity has submitted to the Secretary, in a time and manner specified by the Secretary, and had approved by the Secretary an application.

(2) INFORMATION TO BE INCLUDED- Each such application shall include--

(A) a description of the community rural health network, including service area and capacity, and

(B) a description of how the proposed network will utilize existing health care facilities in a manner that avoids unnecessary duplication.

(e) AUTHORIZATION OF APPROPRIATIONS-

(1) IN GENERAL- There are authorized to be appropriated $50,000,000 for each of fiscal years 1997 through 2001 to carry out this section. Amounts appropriated under this section shall be available until expended.

(2) ANNUAL LIMIT ON ASSISTANCE TO GRANTEE- The amount of financial assistance provided to an entity under this section during a year may not exceed $250,000.

(2) furnishes health care services to individuals residing in the area; and

(3) is governed by a board of directors selected by participating health care providers and residents of the area.

(b) OTHER DEFINITIONS- For purposes of this title:

(1) The term ‘rural area’ has the meaning given such term in section 1886(d)(2)(D) of the Social Security Act.

(2) The term ‘Secretary’ means the Secretary of Health and Human Services.

(3) The term ‘State’ means each of the several States, the District of Columbia, Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa.

(4) The term ‘underserved rural area’ means a rural area designated--

(A) as a health professional shortage area under section 332(a) of the Public Health Service Act; or

(B) as a chronically underserved area under section 201.

SEC. 205. FINANCING THROUGH TERMINATION OF CERTAIN GRANT PROGRAMS.

Notwithstanding any other provision of law, no funds are authorized to be appropriated to carry out the following programs for fiscal year 1997 or any subsequent fiscal year:

(A) The grant program for rural health transition under section 4005(e) of the Omnibus Budget Reconciliation Act of 1987.

(B) The program for rural outreach grants (which program was, for fiscal year 1995, carried out by the Health Resources and Services Administration with funds made available under Public Law 103-333 for such grants).

Subtitle A--Rural Primary Care Hospital Program

SEC. 301. DESIGNATION OF RURAL PRIMARY CARE HOSPITALS.

Section 1820 of the Social Security Act (42 U.S.C. 1395i-4) is amended to read as follows:

‘MEDICARE RURAL PRIMARY CARE HOSPITAL PROGRAM

‘SEC. 1820. (a) STATE DESIGNATION OF FACILITIES-

‘(1) IN GENERAL- A State may designate one or more facilities as a rural primary care hospital in accordance with paragraph (2).

‘(2) CRITERIA FOR DESIGNATION AS RURAL PRIMARY CARE HOSPITAL- A State may designate a facility as a rural primary care hospital if the facility--

‘(A) is located in a county (or equivalent unit of local government) in a rural area (as defined in section 1886(d)(2)(D)) that--

‘(i) is located more than a 20-mile drive from a hospital, or another facility described in this subsection, or

‘(ii) is certified by the State as being a necessary provider of health care services to residents in the area because of local geography or service patterns;

‘(B) makes available 24-hour emergency care services;

‘(C) provides not more than 15 acute care inpatient beds (meeting such standards as the Secretary may establish) for providing inpatient care for a period not to exceed 96 hours (unless a longer period is required because transfer to a hospital is precluded because of inclement weather or other emergency conditions), except that a peer review organization or equivalent entity may, on request, waive the 96-hour restriction on a case-by-case basis;

‘(D) meets such staffing requirements as would apply under section 1861(e) to a hospital located in a rural area, except that--

‘(i) the facility need not meet hospital standards relating to the number of hours during a day, or days during a week, in which the facility must be open and fully staffed, except insofar as the facility is required to make available emergency care services as determined under subparagraph (B) and must have nursing services available on a 24-hour basis, but need not otherwise staff the facility except when an inpatient is present,

‘(ii) the facility may provide any services otherwise required to be provided by a full-time, on-site dietitian, pharmacist, laboratory technician, medical technologist, and radiological technologist on a part-time, off-site basis under arrangements as defined in section 1861(w)(1), and

‘(iii) the inpatient care described in subparagraph (C) may be provided by a physician’s assistant, nurse practitioner, or clinical nurse specialist subject to the oversight of a physician who need not be present in the facility;

‘(E) meets the requirements of subparagraph (I) of paragraph (2) of section 1861(aa); and

‘(F) has executed and in effect an agreement described in subsection (b)(1).

‘(b) AGREEMENTS-

‘(1) IN GENERAL- Each rural primary care hospital shall have an agreement with respect to each item described in paragraph (2) with at least 1 hospital (as defined in section 1861(e)).

‘(2) ITEMS DESCRIBED- The items described in this paragraph are the following:

‘(A) Patient referral and transfer.

‘(B) The development and use of communications systems including (where feasible)--

‘(i) telemetry systems, and

‘(ii) systems for electronic sharing of patient data.

‘(C) The provision of emergency and non-emergency transportation among the facility and the hospital.

‘(3) CREDENTIALING AND QUALITY ASSURANCE- Each rural primary care hospital shall have an agreement with respect to credentialing and quality assurance with at least 1--

‘(A) hospital,

‘(B) peer review organization or equivalent entity, or

‘(C) other appropriate and qualified entity identified by the State.

‘(c) CERTIFICATION BY THE SECRETARY- The Secretary shall certify a facility as a rural primary care hospital if the facility--

‘(1) is designated as a rural primary care hospital by the State in which it is located; and

‘(2) meets such other criteria as the Secretary may require.

‘(d) PERMITTING MAINTENANCE OF SWING BEDS- Nothing in this section shall be construed to prohibit a State from designating or the Secretary from certifying a facility as a rural primary care hospital solely because, at the time the facility applies to the State for designation as a rural primary care hospital, there is in effect an agreement between the facility and the Secretary under section 1883 under which the facility’s inpatient hospital facilities are used for the furnishing of extended care services, except that the number of beds used for the furnishing of such services may not exceed 25 beds (minus the number of inpatient beds used for providing inpatient care in the facility pursuant to subsection (a)). For purposes of the previous sentence, the number of beds of the facility used for the furnishing of extended care services shall not include any beds of a unit of the facility that is licensed as a distinct-part skilled nursing facility at the time the facility applies to the State for designation as a rural primary care hospital.

‘(e) WAIVER OF CONFLICTING PART A PROVISIONS- The Secretary is authorized to waive such provisions of this part and part C as are necessary to conduct the program established under this section.’.

SEC. 302. PAYMENT ON A REASONABLE COST BASIS.

(a) MEDICARE PART A- Section 1814(l) of the Social Security Act (42 U.S.C. 1395f(l)) is amended to read as follows:

‘(l) PAYMENT FOR INPATIENT RURAL PRIMARY CARE HOSPITAL SERVICES- The amount of payment under this part for inpatient rural primary care hospital services is the reasonable costs of the rural primary care hospital in providing such services.’.

(b) MEDICARE PART B- Section 1834(g) of such Act (42 U.S.C. 1395m(g)) is amended to read as follows:

‘(g) PAYMENT FOR OUTPATIENT RURAL PRIMARY CARE HOSPITAL SERVICES- The amount of payment under this part for outpatient rural primary care hospital services is the reasonable costs of the rural primary care hospital in providing such services.’.

SEC. 303. LENGTHENING MAXIMUM PERIOD OF PERMITTED INPATIENT STAY.

Section 1814(a)(8) of the Social Security Act (42 U.S.C. 1395f(a)(8)) is amended by striking ‘72 hours’ and inserting ‘96 hours’.

SEC. 304. PAYMENT CONTINUED TO DESIGNATED ESSENTIAL ACCESS COMMUNITY HOSPITALS.

Section 1886(d)(5)(D) of the Social Security Act (42 U.S.C. 1395ww(d)(5)(D)) is amended--

(1) in clause (iii)(III), by inserting ‘as in effect on September 30, 1996’ before the period at the end; and

(2) in clause (v), by inserting ‘as in effect on September 30, 1996’ after ‘1820(i)(1)’ and after ‘1820(g)’.

SEC. 305. EFFECTIVE DATE.

The amendments made by this subtitle shall apply to services furnished on or after October 1, 1996.

Subtitle B--Rural Emergency Access Care Hospitals

SEC. 311. ESTABLISHMENT OF HOSPITALS.

(a) IN GENERAL- Section 1861 of the Social Security Act (42 U.S.C. 1395x) is amended by adding at the end the following new subsection:

‘(oo)(1) The term ‘rural emergency access care hospital’ means, for a fiscal year, a facility with respect to which the Secretary finds the following:

‘(A) The facility is located in a rural area (as defined in section 1886(d)(2)(D)).

‘(B) The facility was a hospital under this title at any time during the 5-year period that ends on the date of the enactment of this subsection.

‘(C) The facility is in danger of closing due to low inpatient utilization rates and operating losses, and the closure of the facility would limit the access to emergency services of individuals residing in the facility’s service area.

‘(D) The facility has entered into (or plans to enter into) an agreement with a hospital with a participation agreement in effect under section 1866(a), and under such agreement the hospital shall accept patients transferred to the hospital from the facility and receive data from and transmit data to the facility.

‘(E) There is a practitioner who is qualified to provide advanced cardiac life support services (as determined by the State in which the facility is located) on-site at the facility on a 24-hour basis.

‘(F) A physician is available on-call to provide emergency medical services on a 24-hour basis.

‘(G) The facility meets such staffing requirements as would apply under section 1861(e) to a hospital located in a rural area, except that--

‘(i) the facility need not meet hospital standards relating to the number of hours during a day, or days during a week, in which the facility must be open, except insofar as the facility is required to provide emergency care on a 24-hour basis under subparagraphs (E) and (F); and

‘(ii) the facility may provide any services otherwise required to be provided by a full-time, on-site dietitian, pharmacist, laboratory technician, medical technologist, or radiological technologist on a part-time, off-site basis.

‘(H) The facility meets the requirements applicable to clinics and facilities under subparagraphs (C) through (J) of paragraph (2) of section 1861(aa) and of clauses (ii) and (iv) of the second sentence of such paragraph (or, in the case of the requirements of subparagraph (E), (F), or (J) of such paragraph, would meet the requirements if any reference in such subparagraph to a ‘nurse practitioner’ or to ‘nurse practitioners’ were deemed to be a reference to a ‘nurse practitioner or nurse’ or to ‘nurse practitioners or nurses’); except that in determining whether a facility meets the requirements of this subparagraph, subparagraphs (E) and (F) of that paragraph shall be applied as if any reference to a ‘physician’ is a reference to a physician as defined in section 1861(r)(1).

‘(2) The term ‘rural emergency access care hospital services’ means the following services provided by a rural emergency access care hospital and furnished to an individual over a continuous period not to exceed 24 hours (except that such services may be furnished over a longer period in the case of an individual who is unable to leave the hospital because of inclement weather):

(i) in the heading, by striking ‘SERVICES’ and inserting ‘SERVICES AND RURAL EMERGENCY ACCESS CARE HOSPITAL SERVICES’; and

(ii) by adding at the end the following new sentence: ‘The amount of payment for rural emergency access care hospital services provided during a year shall be determined using the applicable method provided under this subsection for determining payment for outpatient rural primary care hospital services during the year.’.

(d) EFFECTIVE DATE- The amendments made by this section shall apply to fiscal years beginning on or after October 1, 1996.

TITLE IV--INCENTIVES FOR HEALTH PROFESSIONALS TO PRACTICE IN RURAL AREAS

Subtitle A--National Health Service Corps

(a) IN GENERAL- Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 (relating to items specifically excluded from gross income) is amended by redesignating section 137 as section 138 and by inserting after section 136 the following new section:

‘SEC. 137. NATIONAL HEALTH SERVICE CORPS SCHOLARSHIP AND LOAN PAYMENTS.

‘(a) GENERAL RULE- Gross income shall not include any qualified scholarship payment or any qualified loan repayment.

‘(b) QUALIFIED PAYMENTS- For purposes of this section, the term ‘qualified scholarship payment’ means any payment made on behalf of the taxpayer by the National Health Service Corps Scholarship Program under section 338A(g) of the Public Health Service Act, and the term ‘qualified loan repayment’ means any payment made on behalf of the taxpayer by the National Health Service Corps Loan Repayment Program under section 338B(g) of such Act.’.

(b) CONFORMING AMENDMENT- Paragraph (3) of section 338B(g) of the Public Health Service Act is amended by striking ‘Federal, State, or local’ and inserting ‘State or local’.

(c) CLERICAL AMENDMENT- The table of sections for part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by striking the item relating to section 137 and inserting the following:

‘Sec. 137. National Health Service Corps scholarship and loan payments.

‘Sec. 138. Cross references to other Acts.’.

(d) EFFECTIVE DATE- The amendments made by this section shall apply to payments made under sections 338A(g) and 338B(g) of the Public Health Service Act after the date of the enactment of this Act.

(a) IN GENERAL- The Secretary of Health and Human Services shall conduct a study for the purpose of determining, with respect to the assignment of members of the National Health Service Corps under subpart II of part D of title III of the Public Health Service Act--

(1) whether the statutory and administrative criteria for the assignment of Corps members should be modified in order to ensure that the members are equitably allocated among health professional shortage areas; and

(2) if so, the recommendations of the Secretary for modifications in the criteria.

(b) REPORT- Not later than May 1, 1997, the Secretary shall complete the study required in subsection (a) and submit to the Congress a report describing the findings made in the study.

(1) by striking ‘physicians’ services’ and inserting ‘primary care services (as defined in section 1842(i)(4) and including services described in such section that are furnished by a physician assistant, nurse practitioner, or nurse midwife and that would be physicians’ services if furnished by a physician)’,

(1) IN GENERAL- Section 1833(m) of the Social Security Act (42 U.S.C. 1395l(m)) is amended by striking ‘area,’ and inserting ‘area (or, in the case of an area for which the designation as a health professional shortage area under such section is withdrawn, in the case of such services furnished to such an individual during the 3-year period beginning on the effective date of the withdrawal of such designation),’.

(2) EFFECTIVE DATE- The amendment made by paragraph (1) shall apply to services furnished in an area for which the designation as a health professional shortage area under section 332(a)(1)(A) of the Public Health Service Act is withdrawn on or after October 1, 1996.

(d) REQUIRING CARRIERS TO REPORT ON SERVICES PROVIDED- Section 1842(b)(3) of the Social Security Act (42 U.S.C. 1395u(b)(3)) is amended--

(1) by striking ‘and’ at the end of subparagraph (I); and

(2) by inserting after subparagraph (I) the following new subparagraph:

‘(J) will provide information to the Secretary not later than 30 days after the end of the contract year on the types of providers to whom the carrier made additional payments during the year for certain services pursuant to section 1833(m), together with a description of the services furnished by such providers during the year; and’.

(e) EFFECTIVE DATE- The amendments made by subsections (a), (b), and (d) shall apply to services furnished on or after October 1, 1996.

(f) SUBMISSION OF REPORT ON STUDY- The Secretary of Health and Human Services shall transmit to Congress, by not later than May 1, 1997, a report on the study being conducted on the criteria for designation of health professional shortage areas under subpart II of part D of title III of the Public Health Service Act and for designation of medically underserved areas under section 330(b) of such Act.

TITLE V--CLASSIFICATION OF RURAL REFERRAL CENTERS

SEC. 501. CLASSIFICATION OF CENTERS.

(a) PROHIBITING DENIAL OF REQUEST FOR RECLASSIFICATION ON BASIS OF COMPARABILITY OF WAGES-

(1) IN GENERAL- Section 1886(d)(10)(D) of the Social Security Act (42 U.S.C. 1395ww(d)(10)(D)) is amended--

(A) by redesignating clause (iii) as clause (iv); and

(B) by inserting after clause (ii) the following new clause:

‘(iii) Under the guidelines published by the Secretary under clause (i), in the case of a hospital which is classified by the Secretary as a rural referral center under paragraph (5)(C), the Board may not reject the application of the hospital under this paragraph on the basis of any comparison between the average hourly wage of the hospital and the average hourly wage of hospitals in the area in which it is located.’.

(2) EFFECTIVE DATE- Notwithstanding section 1886(d)(10)(C)(ii) of the Social Security Act, a hospital may submit an application to the Medicare Geographic Classification Review Board during the 30-day period beginning on the date of the enactment of this Act requesting a change in its classification for purposes of determining the area wage index applicable to the hospital under section 1886(d)(3)(D) of such Act for fiscal year 1997, if the hospital would be eligible for such a change in its classification under the standards described in section 1886(d)(10)(D) (as amended by paragraph (1)) but for its failure to meet the deadline for applications under section 1886(d)(10)(C)(ii).

(b) CONTINUING TREATMENT OF PREVIOUSLY DESIGNATED CENTERS- Any hospital classified as a rural referral center by the Secretary of Health and Human Services under section 1886(d)(5)(C) of the Social Security Act for fiscal year 1991 shall be classified as such a rural referral center for fiscal year 1997 and each subsequent fiscal year.

TITLE VI--PROMOTION OF HEALTH CENTERS IN RURAL REGIONS

SEC. 601. EXPANSION OF HEALTH CENTERS IN RURAL REGIONS.

Section 330 of the Public Health Service Act (42 U.S.C. 254c) is amended by adding at the end the following new subsection:

‘(l) In making grants in rural areas for new or expanded services for each fiscal year under this section, the Secretary shall give priority to projects that would be located in a State, or county or region of a State, that is not already serviced by an existing community health center.’.

SEC. 602. COLLABORATION OF HEALTH CENTERS WITH COMMUNITY HOSPITALS.

Section 330 of the Public Health Service Act (42 U.S.C. 254c), as amended by section 601, is further amended by adding at the end the following new subsection:

‘(m)(1) In making grants under this section for new or expanded services in rural areas for each fiscal year, the Secretary shall give special consideration to projects which have entered into a collaborative agreement with a community hospital that meets the following requirements:

‘(A) The community health center is located in, or adjacent to, the community hospital.

‘(B) To the extent practicable, excess facilities and equipment in or owned by the community hospital are available for use by the community health center.

‘(C) The community health center and the hospital avoid unnecessary duplication of facilities and equipment, except that the center may install appropriate support equipment for routine primary health services.

‘(D) The community health center provides primary health services.

‘(E) To the extent practicable, the community health center provides referrals to providers of supplemental health services.

‘(F) The physicians of the community health center have admitting privileges at the community hospital.

‘(G) To ensure quality, efficiency, and cost-effectiveness, the community health center and the community hospital will work in collaboration to direct patients to the appropriate location for care.

‘(2) For purposes of this subsection, the term ‘community hospital’ means a public general hospital that--

‘(A) is owned and operated by a State, county, or unit of local government or is a private nonprofit community hospital,

‘(B) has less than 75 beds, and

‘(C) primarily serves a rural area designated under subsection (b)(3) as a medically underserved area.

‘(3) For purposes of this subsection, the term ‘rural area’ has the meaning given such term in section 1886(d)(2)(D) of the Social Security Act.’.

TITLE VII--MEDICARE PAYMENT METHODOLOGIES

SEC. 701. TELEMEDICINE SERVICES.

The Secretary of Health and Human Services shall establish a methodology for making payments under part B of the medicare program for telemedicine services furnished on an emergency basis to individuals residing in a rural area (as defined in section 1886(d)(2)(D)).

TITLE VIII--ANTITRUST

SEC. 801. SENSE OF CONGRESS RELATING TO APPLICATION OF GUIDELINES.

It is the sense of Congress that--

(1) the Federal Trade Commission, in conjunction with the Justice Department, give special consideration to antitrust guidelines affecting physician and hospital networks located in rural areas during its ongoing review of such guidelines; and

(2) the completion of the Commission’s review be expedited to provide relief and clarification to physicians and hospitals working to develop alternative means of providing accessible, affordable, and quality health care services to all Americans, especially those living and working in rural areas.

(2) CONFORMING AMENDMENTS- Paragraphs (1) through (3) of section 1837(i) of such Act (42 U.S.C. 1395p(i)) and the second sentence of section 1839(b) (42 U.S.C. 1395r(b)) are each amended by striking ‘1862(b)(1)(B)(iv)’ each place it appears and inserting ‘1862(b)(1)(B)(iii)’.

(1) in the last sentence by striking ‘October 1, 1998’ and inserting ‘the date of the enactment of the Rural Health Improvement Act of 1996’; and

(2) by adding at the end the following new sentence: ‘Effective for items and services furnished on or after the date of the enactment of the Rural Health Improvement Act of 1996, (with respect to periods beginning on or after the date that is 18 months prior to such date), clauses (i) and (ii) shall be applied by substituting ‘30-month’ for ‘12-month’ each place it appears.’.

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